Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Suppose Your Company where you work as Finance Director is Financed by both debt (bonds) and equity (shares). In the Board Meeting, it was agreed that you needed to raise extra funds for capital Expenditure (Kn1 Million). Since your company is listed on the Lusaka Stock Exchange, you sold 400 worth of bonds at Kn1,000 each at 5% coupon rate (A total of Kn400,000 raised). The company further issued stocks (shares) totaling 6,000 at Kn100 each with an expected return of 6% (cost of equity). The company therefore managed to raise the required amount of Kn1, 000,000 for the desired capital expenditure.
Assume Corporate Tax Rate is 35%
REQUIRED:
Calculate the Weighted Average Cost of Capital (WACC) for your company-

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